On March 7 Merck & Co. Inc. announced it would sell
Crixivan(R) (indinavir) in some poor countries for $600 per
patient per year, and Stochrin(R) (efavirenz, better known
in the U.S. as Sustiva(R)) for $500.

The same price will be
available to governments, international agencies,
nonprofits, and private companies such as employers who
want to provide access to AIDS treatment to their
employees. The only condition placed on this program is
that the drugs must be used in the country and not
exported. Merck claims that it will not make a profit on
these sales to developing countries. It said it expects to
triple production of Crixivan to meet the new demand.

And on March 14 Bristol-Myers Squibb Company announced that
it was making its drugs ddI and d4T available "in every
country in Africa" at 15 cents per day for d4T and 85 cents
per day for ddI, which it said is below its cost, "under
its existing ACCESS partnership program with international
agencies, including UNAIDS, World Health Organization,
World Bank, UNICEF and U.N. Population Fund." (March 14
company press release).

Bristol-Myers Squibb also said that it would not let its
patents interfere with access to its AIDS drugs in Africa.
"The company will ensure that its patents do not prevent
inexpensive HIV/AIDS therapy in Africa. The patent for
Zerit, rights to which are owned by Yale University and
Bristol-Myers Squibb, will be made available at no cost to
treat AIDS in South Africa under an agreement the company
has recently concluded with Yale. The company has no other
patent rights in Africa which it will allow to prevent AIDS
therapy there," (March 14 press release). Outside of
Africa, "we will maintain our existing ACCESS pricing
program and address the subject on a country-by-country
basis." (About 70% of people with HIV or AIDS in the world
live in sub-Saharan Africa.)

Last May, Merck, Bristol-Myers Squibb, and three other
major pharmaceutical companies announced major price
reductions for developing countries, through the ACCESS
program with UNAIDS and other agencies. But that program
required country-by-country price negotiations between each
government and the companies. Only three countries
(Senegal, Rwanda, and Uganda) have completed these
negotiations, while about 30 others have expressed
interest; after 10 months, only about 2500 people are being
served. The new procedure should be much simpler in
practice, because of the transparent (public), uniform
price.

With prices currently announced for poor countries by other
pharmaceutical companies (which might be reduced in the
near future), prices to Africans for triple therapy
including either Crixivan or Stochrin (efavirenz) will
still be over $1000 per person per year. Two Indian generic
manufacturers (Cipla Ltd., and Hetero Drugs Ltd.) have now
offered a nevirapine-based triple combination for as low as
$350 per year or less. (Efavirenz and nevirapine are in the
same drug class, non-nucleoside reverse transcriptase
inhibitors; indinavir (Crixivan) is a protease inhibitor.
Indinavir is more difficult to manufacture than nevirapine;
we do not know about efavirenz.)

A March 7 Wall Street Journal report attributed Merck's and
other new pricing programs for poor countries to
"increasing concern by pharmaceuticals executives that
generic competitors are winning a public-relations battle
that could eventually undermine international patents --
their most precious asset."

In a March 19 op ed in The New York Times, one of the
inventors of d4T, William Prusoff of the Yale University
School of Medicine, looked at the history that led to the
current developments. He supported the drug being either
cheap or free in sub-Saharan Africa, while also
acknowledging the contribution of Bristol-Myers Squibb,
which tested the d4T at its expense in more than 13,000
patients in the U.S. and Europe before it was able to get
any income from sales. He is amazed at how rapidly this
issue has moved recently.

Comment

These programs are clearly an important step forward, and
have generally been welcomed by agencies and advocates
trying to make treatment available. But clearly the $500 or
$600 price will require international assistance for
countries with income levels less than that and public
health expenditures sometimes less than $10 per person per
year -- in addition to money for training and other
infrastructure. Eventually millions of people will come in
for treatment, and it is not known how much funding will be
available to help provide it.

While we do not contest the companies' statements that it
will not profit on the sale of the drugs at these prices to
developing countries, we do note that any such calculation
is based on many accounting choices, which are not public.
Also note that with the huge profit margins on patented
pharmaceuticals in the industrialized world, patent holders
have little incentive to reduce production cost, since it
makes up so small a part of the price. So even accepting
the companies' statements fully, developing countries will
have to bear production costs set by rich-world economics
and not appropriate for them.

For the same reasons, there is not necessarily any conflict
between Bristol-Myers Squibb's statement that it will sell
ddI at a loss, and at least one generic company's quote for
ddI at a fraction of the price. Bristol has little
incentive to reduce production cost; generic companies have
great incentive. This is one of the reasons many activists
insist that generic competition must remain an available
option for providing these life-critical but expensive
drugs in poor countries.

We should think through the pros and cons of having an
individual-patient price (such as $600 per year for
Crixivan) for critical drugs for poor countries -- as
opposed to governments, international agencies, and others
contracting to pay pharmaceutical companies a flat price to
manufacture whatever amount of drug is needed for treatment
programs there.

The problem with the individual-patient
price is that it could end up being charged as an out-of-
pocket expense to individual patients, who often have no
possibility of paying that much. On the other hand, the
problem with not having an individual price is loss of
flexibility; for example, the drugs might be restricted to
governments, some of which will not have distribution
programs ready even when some private employers want to
provide coverage.

Perhaps using both would be best:
government and other public programs could receive the
drugs at a flat price regardless of quantity, yet
employers, insurance plans, and other private organizations
could buy the drugs for each patient they treat, if for
whatever reason the government did not provide them.

Both generics and reduced-price drugs from patent holders
will likely be used in the world's poorest countries.
Either way, the key to treatment access for most people
will be effective institution building to bring together
the necessary support -- including money, education and
other infrastructure, and rules that everyone can live
with.
AIDS Treatment NewsPublished twice monthly

AIDS Treatment News reports on experimental and standard
treatments, especially those available now. We interview
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